Brent Grundy was so desperate for income that he opened his first trampoline centre on Christmas Eve 2012 in the car park of Penrith Panthers.
“The reality is that I couldn’t afford to buy Christmas presents for my children so I was desperate for cash,” he says honestly.
“To be honest I spent about a year feeling sorry for myself and crying a lot.”
His company, Flip Out Trampoline Arena, was born out of pure desperation after selling a profitable business resulted in him losing out on $668,000.
“I had an electrical business, which was successful and I sold it to a company, who moved it to another entity, meaning that I couldn’t secure any money from them,” Grundy says ruefully.
“I had received bad legal advice when I drew up the initial contract, which didn’t allow for a clawback provision, thereby all I received was my initial deposit back of $300,000.”
That was back in 2010, leaving Grundy in a bind as to what to do next.
“To be honest, I spent about a year feeling sorry for myself and crying a lot,” he says.
His break came when he was sitting at a children’s birthday party when he saw the organisers stop an elder child from jumping on a trampoline.
“It ruined the whole day for everyone,” Grundy says. “This little girl wasn’t allowed to play with her siblings or her friends because she was taller than the rest so she was forced to sit on the side and watch everyone else have fun.”
From witnessing that event, Grundy came up with the idea to start up trampoline centres not only in Australia but also around the world.
“I thought why not build a trampoline centre where everyone from children of all ages right through to adults can jump up and down for as long as they want.”
And he did.
And if you have ever wondered how much money can be made from such a simple concept as a trampoline centre, prepare to be shocked. In just two short years, Grundy has turned over $32 million. That’s right, $32 million, with franchisees earning their money back within six months.
“We currently have 28 stores across Australia, two in Taiwan, two in Malaysia and we recently donated one to Afghanistan,” he says. “I was watching Sky news and saw the American troops trying to win over the local Afghanistan people with blankets and I thought, ‘why not give them a trampoline centre’.
“I am going to donate one in Cambodia later this year.”
The growth of Flip Out has seen his two main competitors – Bounce with six stores open – and Sky Zone – with three centres open – start to move quicker when it comes to securing appropriate land.
“We spent two years assessing the right areas before opening three Sky Zone in 2014 and we will open at least another five centres this year,” Michael Schreiber, CEO, says.
“This concept of trampoline centres started in the USA, and Australia has the second biggest trampoline market in the world. Families in Australia grew up with trampolines in their back yard.”
Schreiber’s comments are backed by the fact that Vuly trampolines, which manufactures and delivers trampolines around Australia, is hoping to break into the $50 million turnover mark in the 2015-2016 financial year.
“The important things to remember with trampolines is the quality of operation and products,” Schreiber says. “Trampolines are fun for the whole family and the market will continue to grow before over-saturation sees it shrink again before reverting to consolidation. We are here for the long-term.”
Grundy says the profit model is very simple, cash from people paying to bounce.
“Some centres have 2000 people coming in a day, with the centres holding between 130 and 220 trampolines,” Grundy says. “By the time I had started two centres, I had enough cash to buy the third and it just snowballed from there.
“We have people driving from Newcastle to Penrith to bounce and one group of friends hire a weekly bus from Orange to head to Penrith to play on our trampolines.”
It costs $10 to jump up and down for half an hour, and $14 for an hour, meaning it is pretty much affordable for anyone’s budget.
It costs between $800,000 to $1 million to set up a centre, with franchisees needing a six-figure deposit.
“We offer franchisees the opportunity to borrow against our earnings,” Grundy says. “Every franchisee has made their money back within six months of taking on the business and it is great to see everyday Australians making good money within a year of operation.”
Adam Hetherington quit his job in sales to take up the opportunity of buying a franchise to Flip Out in Canberra.
“I visited the Penrith Flip Out Trampoline Arena and couldn’t believe how busy it was,” Hetherington says. “Every time I was there it was packed.”
In April last year, Hetherington opened in Canberra and sold the business this year for a six-figure profit.
“I only sold the business to take up the master franchise in New Zealand,” he says. “I saw how well the model worked in Australia so I thought New Zealand was the perfect place to roll it out.”
Hetherington intends to open 12 Flip Out Trampoline Arena’s in New Zealand during the next few years, starting with Christchurch and Auckland in the next few months.
Revenue from the franchising industry in Australia is expected to reach $159 billion in 2014-15, according to an IBISWorld Industry Report, Franchising in Australia, released in October 2014.
The report states that franchised operators are expected to post steady annualised revenue growth of 2.5 per cent during the next five years to reach $180.1 billion, however, the report warns that “volatility in consumer sentiment has hindered demand for franchised goods and services, as individuals have become concerned about their ability to repay household debt”.
Furthermore, franchising in Australia has experienced both highs and lows in recent times, with Pie Face and Eagle Boys Pizza suffering big financial losses because of a multitude of problems, including expanding too fast, bad locations, rising supplier costs and strange management decisions. Harvey Norman, too, a very well established retail brand, has had its ups and downs.
“It is imperative that you have the funds to resource necessarily and professionally,” Stephen Becsi, CEO, Pulse Australasia, says. “Not enough cash for corporate to support franchisees as promised will impact upon the trust the franchisees have in the franchisor.
“It is also very important that spend the appropriate amount of time ensuring you take on the right franchisees and not just anyone, the wrong person can damage the brand quickly, especially when you not yet established.”
Pulse Australasia is an international management consulting firm that provides advice to top boards, management teams, government departments, as well as growing and established companies.
“Ensuring you have consistent branding, the franchises processes are in place, as well as establishing the right culture from the CEO, who lives in the corporation’s values, is all essential to the success of the business,” Besci says. “A franchisor that doesn’t run their business well could result in the failure of the franchisees.”
But none of this has deterred Grundy. In fact, he plans to have 800 trampoline centres around the world by the end of 2018.
“This year we will be opening in Scotland, Thailand, Saudi Arabia and Qatar, as well as New Zealand,” he says. “We will keep expanding and are currently opening a new centre in Australia every week.”
Grundy doesn’t have much competition in Australia, with only Sky Zone and Bounce owning three and four stores respectively throughout Australia.
“They are really the only competitors and, at the rate we are growing, I don’t see anyone at the moment as a threat,” Grundy says.
And while there are plenty of health benefits to children jumping on trampolines, such as improving bone density, increasing endorphins through the body, improving the lymphatic system and strengthening cells, the most basic reason people love it is that it is a lot of fun.
“It is just as popular with dads as it is with their children,” Grundy says emphatically. “A lot of dads want to show up their children and are often trying to do somersaults and backflips, staying on the trampolines longer than their kids.”
It is often said that the simple things in life are often the best. Flip Out Trampoline Arena is living proof of that mantra.
You can find the original article on the SMH HERE.